Hey everybody,
I am a financial aid advisor for a college and if you guys had any questions about it I would be glad to answer them for you… 
When will Congress give the right to refinance a consolidation loan?
This is a good question. This was raised at a conference by someone that works with me, but it didn’t get an answer. My guess (this is just a guess) is that they want the Title 4 money back faster… But who knows.
For others that are interested, the current consolidation rate is 6.625% approx.
I’d be curious as to how much leeway you personally have in deciding merit- or need-based financial aid for any given student.
How long will the government attempt to recover student loans before writing them off?
Okay. Well here is the deal with that. Merit type stuff is not determined my a financial aid office. In Texas, you have the choice of graduating in different programs from high school. Unfortunately, what you did for that determines what kind of stuff you get.
It might be clear to note that financial aid is government grants and loans. Most merit stuff is scholarships, things that are your responsibility to get.
Good question. Most colleges have a separate scholarship office that deals more with scholarships.
My last job was a subcontractor directly for the department of edcuation. I made sure that the debt collection computer system would run properly. I think that it depends on which program the loan came from (stafford or perkins) but they will turn it over after repeated attempts to contact you by mail. The collection letters are generated where I used to work in Greenville, TX. There is a progression of them. I remember several cases of garnishing people for student loan repayment from the 60’s.
They will get their money back. By either IRS offset (taking away any tax return) or just straight up taking it from your check. Most of the time a lender or bank will work with you before it goes into defualt though because the student loan is guaranteed by the government. They are a little more leanient about making arrangements and so on.
I hope that this helps you out some.
And I forgot to finish the question. As far as need based determination goes, it is all calculated largely by the FAFSA (free application for federal student aid) that the student fills out. It is based on the prior year’s income information.
The FAFSA determines your Expected Family Contribution, or EFC. It is a dollar amount that the government thinks you should be able to pony up for your education that year.
Say I had a student that had parents that were laid off of a job half way through this year, I can take that into consideration and make an adjustment to the EFC. But there are pretty strict guidelines on how I can do that.
The government doesn’t allow you to borrow or get more financial aid than the cost of attendance of your college. That is set every year and is based on tuition rates and etc.
This is an example of how your “need” is determined from the government:
Cost of attendance = 10,000
EFC = 1,000
Need = 9,000
Suppose the amount owed is large enough that even a garnishment is unlikely to recover the money within the debtor’s lifetime? Will they eventually give up, or will they be garnishing the debtor’s social security until he dies?
I don’t do much bankruptcy work, but my understanding is that it is very difficult to discharge student loans…seems like there oughta be some limit to how far they’d go trying to collect. There comes a point where they’re just throwing good money after bad…
Does FAFSA have anything akin to “income averaging” when they determine your eligibility for assistance? We’ve had an unusual year (it’s a long story) and despite every attempt to resist or delay earnings, we will show in excess of 200K this year. Unfortunately, this income is what will appear when we fill out the FAFSA form for our eldest college-bound in Jan of next year. Will prior years’ income be considered, or is it only the most recent year?
Thanks in advance for your answer.
Sorry that I took so long to reply. I had a neighbor come over with some beer… 
Okay. They will garnish you forever, take away your tax returns, and in some cases I have seen them garnish ssi benefits. I think it had a large amout to do with the particular loan that the student had. You can always call the department of education inquiry line at 1-800-621-3115 to ask them. It is run by a company called Pearson. They really aren’t that bad for a subcontractor.
But trust me, they can be dicks about getting their money back.
I’m not sure if you’ll know the answer to this, but how do I get consolidation companies to stop calling me? I have already consolidated my loans and am paying them off, and I like the company I’m dealing with so I have no reason to change. They’re sneaky too - they leave cryptic messages about things I’ve “requested” and about it being too late to consolidate (College Loan Corporation, I’m looking at you). I don’t fall for it, but it’s really annoying, and they also send things to my parents house.
I suspect there is no real way to do this, it’s probably more of a telemarketing question than a student loan question, but I figured I’d put it out there.
You can process an income reduction, but this probably won’t qualify. Without getting into your personal finances in a SDMB thread, take this for an example:
Mom and dad usually make 100,000
Mom and dad get cool bonus so year 2006 = 150,000
The cost of attendance for the college little timmy was going to would is 20,000.
So, before the nice bonus or cashing in of the 401k or whatever, the family would have a EFC (see above) of, say, 21,000 (just making up a number.) If the bonus is figured in, the EFC is 25,000. If you go up to the formula above, you can look at it this way:
Cost of attendace was 20,000
- EFC 21,000 (or 25,000)
Title 4 need: 0 (anything negative is 0)
It is important to note that the vast majority of people that don’t qualify for any financial aid are people who have defaulted on student loans. So every one else would qualify for at least something. It would would be good to mention the differences in student loans.
There is subsidized, or loans that the government will pay the interest on while the student is in school, and unsubsidized, ones that the government will guarantee but the interest will add up.
Anyone can borrow a unsub up to the amount of cost of attendance. Here is an example:
Cost of attendance = 2,000
EFC = = 500
Subsidized loan = 1500
Unsub = 500
Cost of attendance = 2,000
EFC = 3,000
No need, but can borrow up to 2,000 in unsub loans.
Different institutions have limits to the amounts you can borrow per year though. We don’t let anyone borrow more than 7,500 per year as not to bury them in debt, but we are a junior college and it just doesn’t cost that much to go here.
If you have any more questions, feel free to hit me up.
I haven’t heard of CLC doing that, but I wouldn’t be surprised. When I got my undergrad, I never took out any student loans but NelNet kept sending me crap in the mail about consolidation. They most likely get that info from your friendly alumini office or maybe they even pull your credit.
I guess you could just return the mail to sender so they think that they would have a bad address and when they call you request to be taken off their list.
Hope that helps.
What happens if a student racks up huge student loans in med school or law school, or whatever, then becomes a teacher or some other job that doesn’t pay enough to make the regular payments, even with a 30-year loan?
I can retire after my youngest child ends her college freshman year. If I do so, is my pension exempt from income that FAFSA uses to compute my EFC?
Also, all things being equal, does getting a year older help when computing the EFC?
Hmm well it they become a teacher they can apply for a federal program to have some of their student loans forgiven. There is a total limit that a person can borrow in federal student loans in their lifetime, which is a total of 138,500.
Other wise, can’t pay you will be garnished. I work at a junior college and I have a few students that I won’t give any aid to because they have attempted 280 hours (takes about 60 to get an associates) and then they have almost borrowed 46,000 dollars (undergrad limit.)
Is your pension taxed? If so, it will be listed as other taxed income. If it is tax exempt, it will be listed as untaxed income under worksheet B on the FAFSA.
About the age, the only break your child will have is when they turn 24 and are declared an independent student, thus all your financial information won’t be included on his/her fafsa.
I’m planning to go to grad school soon and I have no idea how the financial aid process works, really. I didn’t have to take loans for undergrad since I had a state-sponsored lottery scholarship for tuition and I lived at home for most of it. I filled out the FAFSA and my expected contribution is 0 because I didn’t make a lot of money last year and I can file as an independent since it’s grad school. So will the school send me a financial aid package telling me how I’m going to pay for this (e.g. this is what you can take out of federal loans, this is what we’ll give you, this is what you’ll have to borrow from another lender), or am I going to have to figure this whole thing out on my own? It’s a professional master’s program so it’s not a program where most people get funding.
Is there a good single, comprehensive resource out their on the internet that will explain all this to me? I’ve googled before and I get a whole bunch of info from lots and lots of sites and it just makes me more confused than before.
Thanks.
Okay well, the best resource is probably your financial aid office. There is a website that you can go to, www.studentaid.ed.gov , but keep in mind it is a government site. I would also check out www.mapping-your-future.org. It is a pretty good site as well.
Just keep checking with your school to make sure that they don’t need anything else. If something pops up that they need, they might not get to you in a timely manner because of the sheer amount of students each one has (I have 1100.)
Whatever you do, keep in mind that it is free to get information and to fill out requests for financial aid. Anyplace that is charging is scamming.
Fafsa website = fafsa.ed.gov
Government PIN number site = pin.ed.gov